Governance and Individual Behavior

More than 25 years of research have shown that human beings are not the paragon of super-rationality that we like to think we are (and that much public policy is based upon). Policies that acknowledge this insight can be used to nudge behavior in directions that benefit individuals as well as society as a whole.

A now-classic example is organ donation. The share of people agreeing to be organ donors varies greatly within Europe, from 4 percent in Denmark, 12 percent in Germany, and 17 percent in the United Kingdom to nearly 100 percent in Austria, France, and Poland. The difference is accounted for by the fact that, in the first three countries, people are asked on their driver's license application to â€śCheck the box below if you want to participate in the organ donor program.â€ť People in the other countries are given the choice: â€śCheck the box below if you do not want to participate in the organ donor program.â€ť Because organ donation is a rather complicated moral decision that most people would prefer not to think about, the fall-back, do-nothing choice is appealing.

Public policy in this case is merely changing the wording of the question. In effect, the person who designed the questions is really the one who made the choice about organ donations. Other public policy experiments have shown that knowing that one is being observed can positively affect decision making. In an experiment with a public utility program designed to prevent blackouts, participation in the program tripled when participants knew that their behavior was being observed. Observation was four times more effective than offering a monetary incentive.

In another experiment, in California, door hangers were left on customers' houses indicating how much electricity they used compared to their neighbors. These customers reduced their energy consumption by 10 percent compared to customers given door hangers that offered only energysaving tips. Residents who used less energy than the average actually increased their consumption, howeverâ€”a â€śboomerang effectâ€ť that disappeared when smiley faces were added to the door tags.

Other, more long-term interventions have used insights from behavioral psychology to design educational curricula and course content. An example is the Good Behavior Game, which begins by having students themselves establish norms of good behavior. After these norms are set, groups of students compete to be good. Controlled experiments have shown that the positive effects of the game last until adulthood even when the game is played only in the first two years of school.

A promising area of research is the role of evolved behavior in people's consumption decisions. Consumption behavior is motivated by two desires: to meet basic wants and to gain status. Basic wants can be satisfied, but wants that are driven by status considerations are essentially insatiable. As a result, growth in industrialized economies, with their large populations of middle-class consumers, has become a zero-sum game, contributing little to individual well-being and perhaps even undermining it. Reducing material consumption is thus a necessary component of governance for sustainability, and understanding the evolutionary dynamics behind human behavior may help us design polices to channel behaviors such as status-seeking onto more socially and environmentally benign paths.

Some progress is being made in this area. Neuroscience and behavioral economics, for instance, have all but demolished the rational-actor model of standard economic theory. Economists no longer rely solely on the price system as a policy tool. And although the focus of most research is still on individual behavior, neuroscience research has confirmed the existence of the social brain. The human brain evolved to allow us to function together in social groups: a growing body of evidence indicates that humans are unique among mammals in their degree of sociality. Our ability to solve resource management problems collectively is a manifestation of our uniqueness, and it offers another ray of hope that our species may achieve a sustainable way of living.